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Middle East diesel exports to western Europe head lower after record April

Middle East diesel exports to western Europe head lower after record April
Diesel exports from the Middle East to western Europe are heading for a slowdown in May after a record in April, with the UAE port of Khor Fakkan in the emirate of Sharjah sending its first shipment in almost two years as the EU’s ban on oil products imports from Russia extended to its third month, according to latest shipping data.

Belgium remained the largest destination in April, at 151,000 b/d, while Saudi Arabia was the top supplier, at 331,000 b/d, S&P Global Commodities at Sea data showed. The total was about 634,000 b/d in April, up from 534,000 b/d in March and the most since at least 2016 when the data began being collected. Shipments for May so far are only 163,000 b/d.

“The arb from the Middle East to Europe has been shut for much of the month as the European diesel complex was seen well supplied with its refineries returning from maintenance, signals of sluggish local demand and swelling ARA stocks,” Hedi Grati, S&P Global’s head of Europe/CIS refining research, said. “As a consequence, more Middle East diesel moved eastbound and southbound instead.”

Russia’s domination of European oil product supplies has been upended in the wake of the Ukraine war. Russia was the leading source of diesel and gasoil for western Europe before the war, and the Middle East took over in the first quarter this year, at 369,000 b/d, according to S&P Global forecasts made on May 11.

By the second quarter of 2024, Middle East diesel shipments to both western and eastern Europe are expected to hit 505,000 b/d. The chart below only includes western Europe.

The UAE port of Khor Fakkan, which competes with the nearby oil trading hub at Fujairah, recorded its first diesel shipment to western Europe since July 2021 at 11,000 b/d in April. Oman’s diesel shipments to western Europe climbed to 13,000 b/d in April, the most since October 2022.

The Middle East is flush with new refineries to meet the demand from Europe with Saudi Arabia, Kuwait, Iraq and Oman adding capacity while Abu Dhabi’s giant Ruwais complex is being upgraded. These projects, designed to process domestic crudes, will help boost Middle East crude distillation capacity to 10.04 million b/d by the end of 2023, an almost 20% increase in just five years, according to the S&P Global World Refinery Database.

Kuwait’s Al-Zour refinery made its first “winter grade” diesel shipment to Europe in December 2022, a 66,000 mt cargo. Saudi Arabia’s Jazan refinery is also expected to eventually be a big supplier of diesel to Europe.
Source: Platts

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